Korean shares slide after tech rally fizzles on weak Broadcom guidance
Seoul, June 5
,: The tech rally that was driving the markets to record highs fizzled on Friday as Asian shares came under pressure tracking losses in AI shares on Wall Street.
Korean tech heavyweights Samsung and SK Hynix fell up to 8 per cent taking the index down 4 per cent indicating that investors may be cautious after a record boom drove these companies to a trillion dollar valuation.
The selloff in tech shares came after US chip giant Broadcom reported its second quarter earnings clocking a revenue of $22.19 billion. Some analysts had forecast a stronger revenue for the company in the second quarter. The stock was bludgeoned for its weak guidance as CEO Hock Tan didn't raise company's full-year target of $100 billion in AI chip sales.
The selloff in Broadcom spread to other tech heavyweights as well with shares of Arm Holdings dropping over 4 per cent and Micron Technology slipping nearly 8 per cent.
Markets in US and Asia have seen a blistering rally driven by the frenzy around AI stocks. The big-bang capex expansion plans and the data centre boom along with heavy spending on compute infrastructure brought the AI stocks front and centre of the investor interest.
American chipmaker Micron recently entered the trillion-dollar valuation club as investors poured in money riding on the semiconductor wave.
Japan's Nikkei 225 reached its all-time high of 68,402.13 on June 3 as investors flocked to AI and tech stocks. The SoftBank Group surpassed Toyota Motor to become the most valuable company in Japan on the back of massive AI investments.
The Nasdaq composite closed down less than 0.1 per cent on Thursday after the disappointment from Broadcom. The semiconductor and software maker's shares tumbled 13 per cent.
The Dow closed 875 points up, or 1.7 per cent, after rally in healthcare and financial stocks. The S&P 500 closed 0.4 per cent up, but the tech segment was down 1.4 per cent as chip stocks dropped.
— ANI
Reader Comments
As an investor, I'm watching this closely. The AI hype was bound to face some correction. Broadcom's guidance is a reality check. India's IT sector should take note—diversification is key, not just riding the AI wave. Let's hope our markets stay resilient! 🇮🇳
Samsung and SK Hynix falling 8%? That's massive! Korean markets are really sensitive to global tech sentiment. India should be cautious too—our IT stocks like Infosys and TCS might feel the ripple effect. But hey, every correction is a buying opportunity, na? 😉
Honestly, I'm not surprised. The AI rally was too frothy. Broadcom's CEO Hock Tan not raising the full-year target says a lot about the hype vs reality gap. India needs to focus on building sustainable tech, not just jump on every bandwagon. Aur haan, retail investors, please don't panic sell! 📉
Interesting how the Dow and S&P 500 still managed to close higher due to healthcare and financial stocks. Shows the importance of sector diversification. India's Nifty 50 has a good mix too, but we're heavily influenced by IT and pharma. Hope our SEBI and regulators keep an eye on these global trends. 🤔
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